In order to survive and prosper in the current global market, businesses have had to elect on the best strategy to apply. Indeed, in this competitive environment it has not been easy to settle on one exclusive approach. It is on that premise that companies have applied a mix of the AAA triangle. This includes, arbitrage, aggregation and adaptation. Arbitrage essentially entails the exploitation of opportunities and niches in different regional markets. On the other hand, adaptation involves specializing so as to make the business relevant in the local markets while aggregation entails the application of large economies of scale at a global level. This paper contends that Dell applies the arbitrage strategy most and secondly that it relies on the adaptation strategy. In the ensuing discussion, the paper shall set forth the reasons for its contention.
Dell strategy essentially attempts to maximize profits while minimizing on the costs. Under that front, it deliberately seeks to exploit different regional markets and the opportunities in the same. This approach mirrors the arbitrage method. For instance, in determining the locality of its premises, Dell considers factors such as market access, labor costs and quality, government incentives in terms of taxation and related costs, industry clusters and the general infrastructure. Ideally, the mentioned suggest an approach that is alive to the opportunities available in the regional and national markets. The company seeks to limit its expenditure while maximizing on the income. Indeed, this approach can only fall under the arbitrage strategy for it seeks to exploit any available opportunity while at the same time cutting down on the expenditure. In addition, Dell’s outsourcing policy can be used illustratively in demonstrating its arbitrage strategy. Incidentally, it has elected not to outsource the final assembly of its products. Instead, Dell outsources only the subassemblies such as the motherboards and the barebones. Through this approach, Dell does not stand the risk of creating unnecessary competition for its market while at the same time it leverages on the lower costs of outsourced products. This should be appreciated in the context of the bulky nature of its production. It cannot possibly produce all its inputs without expending unnecessarily. In that connect, Dell perceives it right to outsource the initial inputs which may not be traced in the final output by the typical client. In this way, Dell puts potential competition in the bud while at the same time minimizing costs and operating within the expected timeframes.
In addition to the arbitrage strategy, this paper contends that Dells applies the adaptation strategy albeit on a secondary level. This is attested by its regional organization. Dell is organized in three main geographical regions, namely, Americas, Asia Pacific and Japan and Europe/ Middle East / Africa. It should be appreciated that the regional arrangement is influenced by the related needs of each group. In the same strain, Dell has organized its manufacturing regionally. The main intention in the regional arrangement is the need to address the specific and unique concerns of each region right from the manufacturing level. In that context, Dell is able to come up with products that meet the unique requirements of each region. In addition, the arrangement affords them an opportunity to organize their operations in line with the large demands in the region. In that strain, this paper concludes that Dell equally employs the adaptation strategy.
Works Cited
Kraemer, K., & Dedrick, J. (2002). Dell Computer: Organization of a Global Production Network. Irvine: Center for Research on Information Technology and Organizations . Retrieved from http://crito.uci.edu/papers/2002/dell.pdf
